Frugality Is A Privilege

Having studied the foundations of social innovation and entrepreneurship as a course has given a great picture of its past and present, and a fair idea of its future. The most valuable insight has been that social innovation is aimed not just to provide for the BOP or the underserved, but eventually serves populations that spend several times more for the same product/service. It boils down to one little term: frugality.

Traditionally, any innovation was expected to occur at geographies that had immense wealth, intellect and resources. An increasing responsibility among entrepreneurs, however, has changed that trend in recent decades. Innovators chose smaller, poorer geographies in Asia and Africa to conceive ideas, build solutions at low costs, and then replicate those solutions in developed economies. Dartmouth professor Vijay Govindarajan calls this "reverse innovation." Many western companies have embraced this approach for reasons of both money and the greater good of serving more people. It has come to be famously called 'create far from home, win everywhere.'

While the primary goal of social innovation is to solve the needs of the needy, the idea of reverse innovation has given companies the strategic edge of beating local competition in emerging markets. A local provider sometimes charges exorbitant prices for sub-par products/services. So is there any reason for social innovators to not put the local out of business by stepping in to solve plaguing problems in society? And when cheap and effective solutions are ready, why do developed economies have to pay more? After all, frugality as a privilege is not reserved for the BOP.

The need for frugal innovation and entrepreneurship is only increasing day by day, with growing awareness for quality even among less educated populations. This trend clearly indicates, as mentioned by Prof Zak in our very first class, that social innovation is something that will become regular business for companies and entrepreneurs alike. With society's problems being increasingly solved by social innovators, sonner or later world governments will pitch in with their full support in terms of policies, funds, and other new forms of support (which are, by the way, born as a result of social innovation).